Why You Should Review Your Variable Life Insurance Regularly

No matter what types of insurance you currently have, there remains the fact that you need to visit each policy’s terms and conditions in case you need to update or change something. This also applies to variable life insurance. As a matter of fact, the importance of reviewing variable policies cannot be emphasized enough since it has a cash value account that is invested in a variety of options.

The insurance industry itself encourages all policyholders to check their coverages to ensure that everything is up to date. Even though talking to your agent may end up in pitching to buy more policies, reviewing your policies is self-serving advice that has various advantages on your part.

The truth is, there is at least one fundamental reason regularly reviewing policies is a must. Circumstances change. Without revisiting your policies, you may end up paying for policies you no longer need or left under-insured. Or, in the case of variable policies, get left out of fantastic investment-related opportunities.

There are strong arguments why sifting through your policies is every policyholder’s responsibility.

Reasons to review a variable life insurance policy (and other policies) regularly

Catch mistakes

A household or even a policyholder may be maintaining up to three insurances such as health, car, and life. That’s in addition to one to two members with a variable policy. There could be an error in any of these policies. Some insurances (i.e., life, health, and variable insurances) may have overlapping features wherein you can do without or when you combine the two into a single policy. You may find a lapse in the all-in feature of the insurance coverage that you already want to forego in some cases.

Choose bundles

To continue, you may eventually decide to bundle a policy or two if you discovered a lapse. That is, if you are maintaining different policies from various insurance companies, you may consider bundling at least two of your insurances with a single company. Bundling will give you discounts. For instance, variable life insurance products are commonly marketed as a bundle (protection + cash value). This will allow you to devote the saved amount to other more essential purchases, for instance. Your insurance might be offering conversion privileges that you should take advantage of as well.

Find better rates

Your personal circumstances change, as well as the circumstances around you. That’s why premiums may change, too. You can lower your monthly premiums if you compare quotes regularly. This doesn’t mean hopping from one insurance company to another, but getting the best deals at particular times while staying with the same insurance company. For instance, if you will avail of all the applicable insurances, the company might offer you lower monthly premiums. In availing a variable policy, the cash value grows over time and, in some cases, even exceeds the guaranteed cash value of life insurance. Premiums are higher, but the returns are even greater, so it’s worth it.

Have more assets

Your assets also change. For instance, the more you own, the more you need to be insured. Also, while variable life insurance policies offer cash value increases, it is not guaranteed since it moves along with the economic and trade environments. You may have to pay higher monthly premiums for all your assets, but it is an assurance that you will be covered for what you own in case of damage or theft. The rule of thumb for financial experts is to review your assets and policies after each significant purchase. Besides, you must have formal documentation of your possessions.

Change beneficiaries

Deciding whom to include or leave your benefits to may also change. So, reviewing your policies may also mean adding or changing your beneficiaries. For example, suppose you want to include another beneficiary. In that case, you should reallocate the percentage that each of your beneficiaries should receive, or you may choose to stipulate an ‘equal share’ clause on your condition. This is more so for variable policies that incur cash value over time.

When to review your policies?

This is probably the most subjective insurance-related question. However, it would be advisable for practical and security purposes to reevaluate your insurance regularly, such as quarterly, bi-quarterly, or after every six months. You need not wait for each renewal period to review each policy.

An alternative is to review your policies after each significant life event, such as when you get married or after each child is born and when you become a grandmother or grandfather. As mentioned above, you need to review your coverages after a big-ticket purchase such as a house, car, or even jewelry. You can also check your policy whenever you acquire a mortgage, a mortgage expires, or when each of your children completed college. If you gain new employment, lose a job, or if your salary increases, you should also consider a review. When your spouse or any of your children get critically ill or when you lose any of them, a major review is a must. The same goes for when one of your parents dies or becomes autonomous.

Changes must be regarded as indicators to change or update your policies. Nevertheless, if you anticipate a major change in the future, you should consider reviewing your coverages NOW. Right now, the right question to ask would be when was the last time you actually look at your policies. If you haven’t reviewed your policies since you obtained them, now is the perfect time to conduct a thorough review of what you are paying for every month.

What to include in your review?

Before you start the review, you must read each policy carefully. There might be unintended consequences that may affect the claim, for example. Formal and written notifications must be submitted through your agent to finalize the changes and for these changes to take effect.

Next, look at various factors such as premiums, benefits including benefits build up, guarantees, effects of interest, cash values, conversions, etc. The goal of the review is to determine and make sure that the benefits cover your current needs. When it comes to policies, it is always wise to be aware of your options, be prepared, and act accordingly.  

No one can emphasize enough the importance of reviewing coverages. With the changing life conditions come the changing insurance needs. Gaps are only revealed after reviewing your current policies. With that said, you should never deliberately ignore a regular review. Otherwise, you may end up facing the consequences of skipping a reassessment, such as becoming inadequately insured. Don’t let yourself or your loved ones suffer these unnecessary consequences by connecting with your insurance agent now.

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